Two investment advisers are comparing performance. One averaged a 20% rate of return and the other a 19% rate of return. However, the beta of the first investor was 1.2, whereas that of the second was 1.

a.

Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)?

	First investor
	Second investor
	Cannot determine

b.

If the T-bill rate were 5% and the market return during the period were 10%, which investor would be the superior stock selector?

	Second investor
	First investor
	Cannot determine

c.

If the T-bill rate were 2% and the market return during the period were 18%, which investor would be the superior stock selector?

	First investor
	Second investor
	Cannot determine